EDITOR'S CHOICE -- SCOTT SUTTELL

Reuters handicaps the race for the Cleveland Fed's new president

Blog Entry: November 01, 2013 10:44 AM | Author: SCOTT SUTTELL

Reuters breaks down the search to replace Sandra Pianalto as president of the Federal Reserve Bank of Cleveland and asserts that the next person in the job “could return Cleveland to its outspoken, inflation-fighting roots.”

Two names from the within the Fed bank have emerged as possible successors, Reuters says: research director Mark Schweitzer, 49, and Greg Stefani, 52, the first vice president, which is the position Ms. Pianalto held before she took the reins in 2003.

“But interviews with several current and former Cleveland Fed officials suggest there is a sense it is time to tap a more independent-minded outsider in the mold of previous presidents Jerry Jordan and Lee Hoskins, who still loom large as policymakers who were willing to take on authoritarian Fed Chairman Alan Greenspan in decades past,” according to the analysis.

"They were heavyweights in the price-stability message and a lot of those ideas were absorbed into policy," Gregory Hess, a former visiting scholar at the Cleveland Fed who was also an economist at the Fed Board in Washington, tells Reuters.

Inside the Cleveland Fed, “there is excitement but also some unease about possibly changing course after Pianalto reliably supported a policy of low rates and three rounds of bond-buying stimulus since the 2008 financial crisis,” according to Reuters.

"It's a really good opportunity to bring in some fresh blood," says one Cleveland Fed official who requested anonymity. "Not to shake things up, but just for something different."

One outsider that Cleveland's six-member search committee is expected to consider is David Altig, the Atlanta Fed's director of research who once reported to Mark Sniderman, Ms. Pianalto's chief policy officer, as an associate in the Cleveland Fed's research wing.

Reuters adds that current and former officials “also say a longer-shot candidate is Michael Bryan, a senior economist at the Atlanta Fed who also has roots at the Cleveland Fed.”

Another possibility: Marvin Goodfriend, an economics professor at Pittsburgh's Carnegie Mellon University who once was the top advisor to former Richmond Fed President Alfred Broaddus, an inflation hawk.

This and that

Health care reform's rocky rollout: Some small manufacturers facing soaring costs for employee health insurance “say they are likely to continue coverage for their workers, even though they won't be required to under the Affordable Care Act,” according to this Wall Street Journal story, which includes a comment from an executive at manufacturing company Roll-Kraft in Mentor.

Companies are “wary of discontinuing coverage and sending their employees to new insurance exchanges to obtain their own insurance,” The Journal reports. However, “They say the problem-filled rollout of the federal government's online insurance market has raised further doubts about whether their employees would have access to sufficient coverage at lower costs.”

The story notes that small employers “also are uncertain if they will be able to purchase less expensive small group plans through the new Small Business Health Options Program, also known as the SHOP Marketplace.” These health insurance exchanges for employers with 50 or fewer employees were supposed to begin accepting online applications Oct. 1, but they're now slated to open by the end of November.

One thing is clear: It has become harder for small manufacturers to keep up with insurance costs.

Unlike large manufacturers that have self-insurance trust funds to cover most their claims, “small manufacturers companies rely on insurance carriers to pay their claims and have little leverage against rising premiums,” the story notes.

At Roll-Kraft, a manufacturer of tooling to produce pipes and tubes, employees' spouses “were eliminated from the company's insurance two years ago if they had an option to obtain coverage from another employer,” according to The Journal. "It reduces the number of people who are covered," says executive vice president Sanjay Singh. "In the last couple years, it's an idea that's been gaining traction."

Middle ground: Former U.S. Rep. Steve LaTourette is the go-to guy for comments in Tea Party-related stories, and sure enough, he pipes up in this New York Times story about a key race in Alabama.

From the story:

In the first test of its post-government-shutdown effort to derail Tea Party candidates, the U.S. Chamber of Commerce put on a rally on Tuesday in the warehouse of an aluminum plant to show its support for Bradley Byrne, a lawyer and former Republican officeholder.

Companies as diverse as Caterpillar and AT&T have also sent in a last-minute flurry of donations. The goal, backers of Mr. Byrne said, is to elect not just a Republican, but the right kind of pro-business one.

Dean Young, the Tea Party-backed businessman who is running against Mr. Byrne, seems only to be reveling in his opponent's establishment, big-money support, repeatedly praising Senator Ted Cruz of Texas for leading the way to the government shutdown and saying that if he wins it will be in the face of “the entire Republican establishment.”

“We can have all the money in the world, but if we can't get the center-right Republicans to the polls on Primary Day then it does not matter,” says Mr. LaTourette, who is trying to build an $8 million “super PAC” to help support more mainstream Republicans in 2014 primaries.

Feeding time: Reuters reports that a federal judge has made it easier for Irving Picard, the BakerHostetler partner serving as the trustee seeking money for Bernie Madoff's victims, “to pursue more than $8 billion of claims against banks and other financial firms that received money from 'feeder funds' that profited from the swindler's massive Ponzi scheme.”

U.S. District Judge Jed Rakoff in New York said federal bankruptcy law did not require Mr. Picard to obtain final court orders against the feeder funds before pursuing claims against third parties to which those funds transferred money, according to the news service.

The ruling “keeps alive claims in roughly 57 cases, against defendants including affiliates of Bank of America Corp., Barclays Plc and Standard Chartered Plc,” that now will be handled in the U.S. Bankruptcy Court in Manhattan, Reuters reports.

Mr. Picard says he so far has recovered $9.5 billion of the $17.3 billion of principal that Madoff's customers lost.

Big fish:“Double Down,” a new book about the 2012 presidential campaign, is filled with insider gossip for political junkies.

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